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American Capital Agency Corp. Message Board

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  • reits_r_us reits_r_us Feb 6, 2013 12:02 PM Flag

    Thoughts on Possible Divvy Reduction, Put Selling, etc.

    Hey Head,

    You don't follow my threads...;-)

    I have stated in a number of threads that the MMs have already factored in a reduction to a 1.00 dividend going forward. That is why you will note that all of the contract month's strikes(ATM and ITM) are priced @ 1.00/dividend. Eg 14Jan32Put today @ 4.25/5.15 or a probable 4.50 short. That equals (1.00 x 4 + .37 on today's price + a little time). Check it out...the MMs are not dumb..they know the probabilities.

    I just covered my ShortJun27Puts today for about a 40% profit. I will wait on Earnings. The March and Junes will be the sweet ride if we go down some as the MMs have factored in the EX dates being prior to OPEX, which I don't believe is correct(at least for March). As a result the dividends are in the premiums and they should not be, if I am correct. That has nothing to do with a divi reduction though.



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    • Hey Doc,

      Sorry, but somewhere over the last few weeks been so wrapped up in my work here that I haven't been able to follow the MBs as much as before. Should'e figured you'd been watching those put premiums all along. The wide spreads on the put you mentioned (14Jan32) at 4.25/5.15 seem to imply the MMs playing it a little loose, in case the divvy does come in over a buck.

      I'm with you on the ex-dates for March and June. I think OpEx will be before both of them.

      By the way, for another stock with what i think are skewed option prices, take a look at TWO. :-)

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